Page 1 of 32


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                 --------------

                                    FORM 10-K

__X__    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1996      Commission File Number 0-18278


                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                        A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

            California                                   68-0191380
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


2401 Kerner Boulevard, San Rafael, California                 94901-5527
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:     (415) 485-4500
                                                        --------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:  Units of Limited
Partnership Interest

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge, in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _______

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                               Yes __X__ No _____

As of December 31, 1996,  6,242,943 Units of Limited  Partnership  interest were
outstanding.  No  market  exists  for the  Units  of  Partnership  interest  and
therefore there exists no aggregate market value at December 31, 1996.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE


<PAGE>


                                                                    Page 2 of 32




                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                        A CALIFORNIA LIMITED PARTNERSHIP

                          1996 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS


                                                                         Page

                                     PART I

Item 1.    Business......................................................  3
Item 2.    Properties....................................................  4
Item 3.    Legal Proceedings.............................................  5
Item 4.    Submission of Matters to a Vote of Security Holders...........  5


                                     PART II

Item 5.    Market for the Registrant's Securities and Related 
           Security Holder Matters.......................................  5
Item 6.    Selected Financial Data.......................................  5
Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations.....................................  6
Item 8.    Financial Statements and Supplementary Data...................  9
Item 9.    Disagreements on Accounting and Financial Disclosure Matters.. 28


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant............ 28
Item 11.   Executive Compensation........................................ 29
Item 12.   Security Ownership of Certain Beneficial Owners and Management 29
Item 13.   Certain Relationships and Related Transactions................ 29


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on 
           Form 8-K...................................................... 30


Signatures............................................................... 31



<PAGE>


                                                                    Page 3 of 32


                                     PART I

Item 1.    Business.

General Development of Business.

        Phoenix  Leasing  Cash  Distribution  Fund  IV,  a  California   limited
partnership (the Partnership), was organized on August 22, 1989. The Partnership
was registered  with the Securities  and Exchange  Commission  with an effective
date of December 27, 1989 and shall  continue to operate  until its  termination
date unless dissolved sooner due to the sale of substantially  all of the assets
of the  Partnership  or a vote of the Limited  Partners.  The  Partnership  will
terminate  on  December  31,  2000.  The  General  Partner  is  Phoenix  Leasing
Incorporated,  a California  corporation.  The General Partner or its affiliates
also is or has been a general  partner in  several  other  limited  partnerships
formed to invest in capital equipment and other assets.

        The  initial  public   offering  was  for  3,750,000  units  of  limited
partnership  interest at a price of $20 per unit.  During 1991, the  Partnership
increased  the  public  offering  up  to  a  maximum  of  6,500,000  units.  The
Partnership  completed its public  offering on December 27, 1991. As of December
27, 1991, the  Partnership  sold 6,492,727 units for a total  capitalization  of
$129,847,540. Of the proceeds received through the offering, the Partnership has
incurred $16,292,000 in organizational and offering expenses.

Narrative Description of Business.

Equipment Leasing and Financing Operations

        From the initial formation of the Partnership through December 31, 1996,
the total  investments in equipment leases and financing  transactions  (loans),
including  the  Partnership's  pro rata  interest in  investments  made by joint
ventures, approximate $266,852,000. The average initial firm term of contractual
payments  from  equipment  subject to lease was 43.09  months,  and the  average
initial net monthly payment rate as a percentage of the original  purchase price
was 2.71%. The average initial firm term of contractual  payments from loans was
62.09 months.

        The  Partnership's  principal  objective  is to produce cash flow to the
investors on a  continuing  basis over the life of the  Partnership.  To achieve
this  objective,  the  Partnership  will  invest  in  various  types of  capital
equipment and other assets to provide  leasing or financing of the same to third
parties, including Fortune 1000 companies and their subsidiaries,  middle-market
companies,  emerging growth  companies,  franchised  businesses,  pay television
system  operators  and others,  on either a long-term or short-term  basis.  The
types of equipment that the Partnership will invest in will include,  but is not
limited to, computer  peripherals,  terminal  systems,  small computer  systems,
communications  equipment,  IBM mainframes,  IBM-software compatible mainframes,
office  systems,  CAE/CAD/CAM  equipment,  telecommunications  equipment,  cable
television equipment, medical equipment,  production and manufacturing equipment
and software products.

        In addition  to  acquiring  equipment  for lease to third  parties,  the
Partnership,  either directly or through the investment in joint  ventures,  has
provided  limited  financing  to  certain  emerging  growth   companies,   cable
television  operators,  manufacturers  and their  lessees with respect to assets
leased  directly  by  such  manufacturers  to  third  parties.  The  Partnership
maintains a security  interest in the assets financed and in the receivables due
under any lease or rental  agreement  relating  to such  assets.  Such  security
interests  constitute a lien on the equipment and will give the  Partnership the
right, upon default, to obtain possession of the assets.

        During the Partnership  offering,  the Partnership  acquired significant
amounts of  equipment  or assets and  provided  financing  with the net offering
proceeds. In addition, the Partnership has acquired equipment through the use of
debt financing.  The ratio of the outstanding debt to net capital  contributions
less any investment in Leveraged Joint Ventures at the end of the  Partnership's
offering  period will not exceed  one-to-one.  The cash flow  generated  by such
investments in equipment  leases or financing  transactions has been and will be
used to provide for debt service,  to provide cash distributions to the Partners
and the remainder will be reinvested in capital equipment or other assets.

        The  Partnership has acquired and intends to acquire and lease equipment
pursuant to either  "Operating"  leases or "Financing"  leases.  At December 31,
1996, approximately 93% of the equipment owned by the Partnership was classified
as Financing  leases.  The  Partnership has also provided and intends to provide
financing  secured by assets in the form of notes  receivable.  Operating leases
are generally  short-term  leases under which the lessor will receive  aggregate
rental  payments  in an  amount  that is less  than  the  purchase  price of the


<PAGE>


                                                                    Page 4 of 32


equipment.  Financing  leases are  generally  for a longer  term under which the
noncancellable  rental  payments due during the initial term of the lease are at
least sufficient to recover the purchase price of the equipment.

        Competition.  The General  Partner has  concentrated  the  Partnership's
activities in the equipment  leasing and financing  industry,  an area where the
General Partner has developed an expertise.  The equipment  leasing  industry is
extremely  competitive.  The  Partnership  competes  with many well  established
companies having substantially greater financial resources.  Competitive factors
include pricing,  technological  innovation and methods of financing  (including
use of various short-term and long-term financing plans, as well as the outright
purchase  of  equipment).   Generally,  the  impact  of  these  factors  to  the
Partnership  would be the  realization of increased  equipment  remarketing  and
storage costs, as well as lower residuals  received from the sale or remarketing
of such equipment.

Cable Television System Operations.

        Phoenix  Westcom  Cablevision,  Inc. (the  Subsidiary),  a  wholly-owned
subsidiary of the Partnership,  owned a cable television  system in the state of
Arizona that was acquired through  foreclosure on a defaulted note receivable to
the   Partnership   on  December  23,  1994.  The  net  carrying  value  of  the
Partnership's   share  of  this  defaulted  note  receivable  was  approximately
$885,000.  Phoenix Cable  Management  Inc.  (PCMI),  an affiliate of the General
Partner,  provides  day  to day  management  services  in  connection  with  the
operation of the system. On October 23, 1996, Phoenix Westcom Cablevision,  Inc.
sold all the  assets  used in the  operations  of its  cable  television  system
receiving proceeds of approximately $735,000, resulting in a loss on sale of the
assets of the  cable  system  of  $64,000.  As a result of the sale of the cable
television system's assets, the Subsidiary ceased operations.

Other.

        A brief  description of the type of assets in which the  Partnership has
invested as of December 31, 1996, together with information  concerning the uses
of assets is set forth in Item 2.


Item 2.    Properties.

Equipment Leasing and Financing Operations.

        The  Partnership  is  engaged in the  equipment  leasing  and  financing
industry and as such,  does not own or operate any  principal  plants,  mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans.

        As of  December  31,  1996,  the  Partnership  owns  equipment  and  has
outstanding  loans to borrowers with an aggregate  original cost of $95,937,000.
The  equipment  and loans have been made to  customers  located  throughout  the
United States.  The following  table  summarizes the type of equipment  owned or
financed by the Partnership,  including its pro rata interest in joint ventures,
at December 31, 1996.

                                                                  Percentage of
       Asset Types                         Purchase Price(1)      Total Assets
       -----------                         -----------------      -------------
                                        (Amounts in Thousands)

Capital Equipment Leased to Emerging
 Growth Companies                              $ 23,644                25%
Computer Peripherals                             19,255                20
Furniture and Fixtures                           18,491                19
Small Computer Systems                            8,611                 9
Financing Related to Emerging 
 Growth Companies                                 7,268                 8
Computer Mainframes                               5,644                 6
Miscellaneous                                     5,107                 5
Financing of Other Businesses                     4,357                 4
Telecommunications                                2,769                 3
Financing Related to Pay TV Systems
 and Other Media                                    791                 1
                                               --------               ---

TOTAL                                          $ 95,937               100%
                                               ========               ===


<PAGE>

                                                                    Page 5 of 32


(1)   These  amounts  include the  Partnership's  pro rata interest in equipment
      joint ventures of $6,785,000,  a financing joint venture of $290,000, cost
      of equipment  on  financing  leases of  $39,970,000  and original  cost of
      outstanding loans of $12,126,000 at December 31, 1996.


Item 3.    Legal Proceedings.

        The  Registrant  is not a party to any pending legal  proceedings  which
would have a material adverse impact on its financial position.


Item 4.    Submission of Matters to a Vote of Security Holders.

        No matters  were  submitted to a vote of limited  partners,  through the
solicitation of proxies or otherwise, during the year covered by this report.


                                     PART II

Item 5.    Market for the Registrant's Securities and Related Security Holder
           Matters.

        (a)The  Registrant's  limited  partnership  interests  are not  publicly
           traded.  There is no market for the Registrant's  limited partnership
           interests and it is unlikely that any will develop.

        (b)Approximate Number of Equity Security Investments:

                                                      Number of Unit Holders
                     Title of Class                   as of December 31, 1996
           ----------------------------------         -----------------------

           Limited Partners                                    8,343


Item 6.    Selected Financial Data.


                              1996(1)   1995(1)   1994(1)    1993      1992
                             --------  --------  --------  --------  --------
                            (Amounts in Thousands Except for Per Unit Amounts)


Total Income                 $ 12,926  $ 15,469  $ 20,589  $ 35,234  $ 41,748

Net Income (loss)               5,856     4,228    (1,217)      980     4,440

Total Assets                   39,575    50,262    66,299    99,380   138,814

Long-term Debt Obligations       --        --         114     3,656    17,668

Distributions to Partners      15,880    16,062    16,174    16,289    16,189

Net Income (loss) per 
 Limited Partnership Unit         .81       .41      (.19)      .03       .56

Distributions per Limited
 Partnership Unit                2.40      2.40      2.40      2.41      2.38

(1) These amounts reflect the consolidated activity of the Partnership and its
    subsidiary.

        The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.

<PAGE>
                                                                    Page 6 of 32


Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

Results of Operations

        Phoenix   Leasing  Cash   Distribution   Fund  IV  and  Subsidiary  (the
Partnership)  reported net income of $5,856,000  for the year ended December 31,
1996, as compared to $4,228,000  during 1995 and a net loss of $1,217,000 during
1994.  The  increase  in  earnings  during  1996 and 1995,  as  compared  to the
respective  previous  year,  is due to a decrease in total  expenses,  primarily
depreciation, that exceeded the decrease in total revenues.

        The decrease in total revenues of $2,543,000 for the year ended December
31, 1996,  as compared to 1995,  is primarily the result of a decrease in rental
income of $2,021,000,  and to a lesser extent,  a decrease in earned income from
financing  leases of  $965,000.  The  decrease in total  revenues of  $5,120,000
during the year ended December 31, 1995, as compared to the same period in 1994,
was primarily attributable to a decrease in rental income of $3,783,000, as well
as,  decreases in earned income from financing leases of $1,233,000 and interest
income from notes receivable of $838,000.

        The decrease in rental  income  during 1996 and 1995, as compared to the
same period in the previous  year,  is a reflective of a decrease in the size of
the equipment  portfolio.  The  Partnership  owned  equipment  with an aggregate
original  cost of $76.7 million at December 31, 1996 ,as compared to $96 million
at December 31, 1995. Partially offsetting this factor, in 1996, is a settlement
payment  which is included in rental  income of $638,000  from a lessee that had
defaulted in 1992.

        An  additional  factor  contributing  to the decline in rental income in
1995, was the increase in the amount of equipment  being held for lease.  During
1994,  many of the initial lease terms of the  Partnership's  equipment began to
expire.  As a result,  the  Partnership  must  either  renew the leases with the
current  lessee,  remarket the  equipment to new lessees or sell the  equipment.
Until new lessees or buyers of equipment can be found,  the equipment  continued
to generate  depreciation  expense without any corresponding  rental income. The
effect  of  this  was a  reduction  of  the  Partnership  earnings  during  this
remarketing period.

         The decrease in earned  income from  financing  leases  during 1996 and
1995, as compared to the same period in the previous  year, is due to a decrease
in the  Partnership's  net  investment  in  financing  lease to $17  million  at
December 31, 1996 from $24.7  million at December 31, 1995.  The  investment  in
financing leases, as well as earned income from financing leases,  will decrease
over the lease  term as the  Partnership  amortizes  income  over the lease term
using the interest  method of accounting.  This effect will be mitigated to some
degree as the Partnership  continues to invest in new financing  leases over its
life.  During both 1996 and 1995, the  Partnership  invested $6.4 million in new
financing leases.

        The Partnership reported a gain on the sale of securities of $977,000 on
proceeds  from  the sale of  securities  of  $1,005,000  during  the year  ended
December  31,  1996,  as  compared to a gain of $235,000 on proceeds of $235,000
during 1995, and a gain of $118,000 on proceeds of $118,000  during 1994.  These
securities  consisted  of  common  stock  and  stock  warrants  granted  to  the
Partnership  as part of a  financing  agreement  with  several  emerging  growth
companies.  The  Partnership  owns shares of common stock and stock  warrants in
emerging  growth  companies that are publicly  traded with  unrealized  gains of
$525,000 at December 31, 1996.  These  investments  in stock and stock  warrants
carry certain  restrictions,  but  generally can be exercised  within a one year
period.

        An additional  factor  contributing to the decline in total revenues for
the year ended  December  31,  1995,  compared  to 1994,  was the  reduction  in
interest  income from notes  receivable  of $838,000.  This decline was due to a
decrease in the net carrying value of  outstanding  notes as well as an increase
in impaired notes receivable.  During 1995, the Partnership  received payoffs of
$1,251,000  from  three  notes  receivable  and  foreclosed  upon  another  note
receivable.  As a result, the Partnership  applied $133,000 of its allowance for
losses on notes receivable during 1995. This activity was the primary reason for
the decrease in interest  income and the decreased  net carrying  value of notes
receivable  to $5.4  million at December  31, 1995 from $8.9 million at December
31, 1994. At December 31, 1995, the Partnership  held notes  receivable that are
classified as impaired with a net carrying value of $2,747,000.  The Partnership
does not accrue interest income on notes receivable that have been determined to
be impaired.

        In contrast,  interest income from notes receivable had a small increase
of $45,000 for the year ended  December  31,  1996,  as  compared to 1995.  This
increase in interest  income from notes  receivable is primarily the result of a
settlement  received from a note receivable  which was considered to be impaired
from a cable television system operator and new investments in notes receivable.
The  Partnership  received  $856,000  as a  settlement  which was applied to the
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                                                                    Page 7 of 32

$605,000  outstanding note receivable  balance and the remainder of $251,000 was
recognized  as  interest income  from  notes  receivable.  During the year ended
December 31, 1996, the Partnership  made new investments in notes  receivable of
$2,440,000 compared to $1,856,000 during 1995.

        Partially  offsetting  the  factors  contributing  to  the  increase  in
interest  income from notes  receivable for the year ended December 31, 1996, as
compared to the previous  year, is the decline in the net carrying  value of the
notes receivable.  The net carrying value of the outstanding notes receivable at
December 31, 1996 is $4.6 million compared to $5.4 million at December 31, 1995.

        Total expenses  decreased by $4,252,000 and $10,524,000  during 1996 and
1995,  respectively,  as  compared to the same period in the  previous  year.  A
majority  of  the  decrease  in  total  expenses  is  due  to  the  decrease  in
depreciation  expense  of  $2,360,000  and  $7,488,000  during  1996  and  1995,
respectively, as compared to the same period in the previous year. This decrease
is  due to a  decline  in the  amount  of  depreciable  equipment  owned  by the
Partnership.  In addition,  the Partnership  experienced  declines in most other
expense categories during 1996 and 1995, when compared to the same period in the
previous year.

        Inflation  affects the  Partnership  in relation to the current  cost of
equipment  placed on lease and the residual  values  realized when the equipment
comes  off-lease and is sold.  During the last several years  inflation has been
low, thereby having very little impact upon the investments of the Partnership.

Cable Television System:

        Included in other income for 1996 and 1995 is cable subscriber  revenues
from  a  wholly-owned  subsidiary  (Phoenix  Westcom  Cablevision,  Inc)  of the
Partnership.  The cable television system was acquired through  foreclosure on a
defaulted note  receivable to the Partnership on December 23, 1994. As a result,
there were no results of  operations  from this cable  television  system during
1994.

        On October 10, 1996,  Phoenix Westcom  Cablevision  Inc. sold all of its
tangible and  intangible  assets used in the  operation of its cable  television
system for proceeds of $735,000  resulting in a loss on the sale of these assets
of $64,000.  This loss on sale is included in other  income  during  1996.  As a
result of the sale of the  cable  television  system's  assets,  the  subsidiary
ceased operations. The revenues from this cable television system have not had a
significant impact upon total revenues during 1996 and 1995.


Liquidity and Capital Resources

        The  Partnership's  primary  source of  liquidity  is  derived  from its
contractual  obligations  with a  diversified  group of lessees  for fixed lease
terms at fixed rental  amounts,  and from  payments of principal and interest on
its  outstanding  notes  receivable.  As the  initial  lease terms  expire,  the
Partnership  will re-lease or sell the  equipment.  The future  liquidity of the
Partnership  will depend upon the General  Partner's  success in collecting  the
contractual  amounts owed, as well as re-leasing  and selling the  Partnership's
equipment as it comes off lease.

        The  Partnership  reported  net cash  generated  by  equipment  leasing,
financing  and cable  television  activities  of  $23,034,000  during  1996,  as
compared to $26,689,000 and $38,461,000 during 1995 and 1994, respectively.  The
decrease in the net cash generated  during 1996 and 1995 is due to a decrease in
rental income and payments on notes receivable and financing leases.

        The Partnership received proceeds from the sale of equipment of $925,000
during the year ended  December 31, 1996 compared to $3,428,000  and  $4,869,000
received in 1995 and 1994, respectively.  The decrease in sales proceeds in 1996
and 1995 is  attributable  to a decrease in the amount of equipment sold as well
as a decrease  in the market  value of the  equipment  sold.  During  1996,  the
Partnership  sold  equipment  with an aggregate  original  cost of $25.8 million
compared to $38.8 million during 1995 and $48.3 million during 1994.

        The Partnership's  outstanding debt was paid off in full during 1995. As
a result , the Partnership  did not make any payments of principal  during 1996,
as compared to payments of principal on its  outstanding  debt of  $3,195,000 in
1995 and $14,311,000 in 1994.

        The  Partnership  received  cash  distributions  from joint  ventures of
$727,000  during 1996, as compared to cash  distributions  of $1,195,000  during
1995 and $9,713,000 during 1994.  Distributions  from joint ventures were higher
during  1995,  as  compared  to  1996,  due  to  the  Partnership   receiving  a
distribution  of excess  cash on hand from a joint  venture  that was  formed on
August 1, 1994.  During 1994, this newly formed joint venture made a significant

<PAGE>


                                                                    Page 8 of 32


distribution  as a result of it  receiving  proceeds  from the issuance of lease
backed certificates.  As a result, this joint venture made a distribution of the
proceeds to the Partnership. This joint venture was not expected to generate any
significant  amounts of cash available for  distribution  until the  outstanding
debt  of this  joint  venture  was  paid in  full.  In  November  of  1996,  the
outstanding  debt had been  repaid in full.  This joint  venture is  expected to
begin making distributions to the Partnership in 1997.

        The Partnership  anticipates reinvesting a portion of the cash generated
from  operations in new leasing or financing  transactions  over the life of the
Partnership.  During 1994,  1995 and 1996, the Partnership  purchased  equipment
leases with an aggregate  original cost of $6.4 million,  $6.4 million and $14.8
million,  respectively.  The equipment  owned by the Partnership at December 31,
1996 approximates $76.7 million, as compared to $96 million at December 31, 1995
and $128.4 million at December 31, 1994.

        As of December 31, 1996, the Partnership  owned equipment being held for
lease with an original  purchase  price of  $17,496,000  and a net book value of
$1,015,000 , compared to $8,349,000 and $997,000,  respectively, at December 31,
1995 and  $21,667,000 and  $1,855,000,  respectively,  at December 31, 1994. The
General  Partner  is  actively  engaged,  on  behalf  of  the  Partnership,   in
remarketing and selling the Partnership's equipment as it becomes available.

        The total cash distributed to partners during 1996 was  $15,880,000,  as
compared to $16,062,000  during 1995 and $16,174,000  during 1994. In accordance
with the partnership agreement,  the limited partners are entitled to 95% of the
cash available for  distribution and the General Partner is entitled to 5%. As a
result, the limited partners received  $15,085,000,  $15,258,000 and $15,364,000
during 1996, 1995 and 1994,  respectively.  The cumulative cash distributions to
limited   partners  was  $88,222,000  at  December  31,  1996,  as  compared  to
$73,137,000  at December 31, 1995 and  $57,879,000  at December  31,  1994.  The
General Partner  received  $795,000,  $804,000 and $810,000 for its share of the
cash available for distribution  during 1996, 1995 and 1994,  respectively.  The
Partnership  currently  anticipates making distributions to partners during 1997
at approximately the same rate as 1996.

        The cash to be  generated  from  leasing  and  financing  operations  is
anticipated to be sufficient to meet the  Partnership's  continuing  operational
expenses and to provide for distributions to partners.

        Forward-looking  statements in this report are made pursuant to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Actual  results could differ from those  anticipated  by some of the  statements
made above. Limited Partners are cautioned that such forward-looking  statements
involve risks and uncertainties including without limitation the following:  (i)
the  Partnership's  plans are subject to change at any time at the discretion of
the General Partner of the Partnership,  (ii) future technological  developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services,  (iv) substantial  customer defaults or cancellations,  (v)
changes  in  business  conditions  and the  general  economy,  (vi)  changes  in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets .



<PAGE>


                                                                    Page 9 of 32




















        Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                     A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY

                              YEAR ENDED DECEMBER 31, 1996



<PAGE>


                                                                   Page 10 of 32
















                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------


The Partners
Phoenix Leasing Cash Distribution Fund IV, a California limited partnership

We have audited the  consolidated  financial  statements of Phoenix Leasing Cash
Distribution Fund IV, a California limited partnership,  and Subsidiary,  listed
in the accompanying index to financial  statements (Item 14(a)). Our audits also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These  financial  statements  and the  schedule  are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about whether the financial  statements  and schedule are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion, the consolidated financial statements listed in the accompanying
index to financial  statements  (Item  14(a))  present  fairly,  in all material
respects,   the  consolidated   financial   position  of  Phoenix  Leasing  Cash
Distribution  Fund IV, a California  limited  partnership,  and  Subsidiary,  at
December 31, 1996 and 1995, and the consolidated results of their operations and
their cash flows for the three years in the period ended  December 31, 1996,  in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related  financial  statement  schedule,  when considered in relation to the
basic  financial  statements  taken as a whole,  presents fairly in all material
respects the information set forth therein.


                                                            ERNST & YOUNG LLP


San Francisco, California
  January 20, 1997



<PAGE>


                                                                   Page 11 of 32


                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)

                                                             December 31,
                                                          1996          1995
                                                        --------      --------
ASSETS

Cash and cash equivalents                               $ 12,134      $ 11,571

Accounts receivable (net of allowance for
  losses on accounts receivable of $424
  and $548 at December 31, 1996 and 1995,
  respectively)                                              484           603

Notes receivable (net of allowance for losses
  on notes receivable of $2,224 and $2,241 at
  December 31, 1996 and 1995 respectively)                 4,654         5,428

Equipment on operating leases and held for
  lease (net of accumulated depreciation of
  $26,179 and $32,579 at December 31, 1996 and
  1995, respectively)                                      1,376         2,576

Net investment in financing leases (net of
  allowance for early terminations of $941 and
  $755 at December 31, 1996 and 1995, respectively)       16,973        24,685

Investment in joint ventures                               2,278         2,451

Capitalized acquisition fees (net of accumulated
  amortization of $9,695 and $8,961 at December
  31, 1996 and 1995, respectively)                           957         1,336

Other assets                                                 719         1,612
                                                        --------      --------

    Total Assets                                        $ 39,575      $ 50,262
                                                        ========      ========

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

  Accounts payable and accrued expenses                 $  1,511      $  1,817
                                                        --------      --------

    Total Liabilities                                      1,511         1,817
                                                        --------      --------

Partners' Capital:

  General Partner                                           --            --

  Limited  Partners, 6,500,000 units authorized,
    6,492,727 units issued, 6,242,943 and
    6,318,955 units outstanding at December 31,
    1996 and 1995, respectively                           37,539        48,068

  Unrealized gain on available-for-sale securities           525           377
                                                        --------      --------

    Total Partners' Capital                               38,064        48,445
                                                        --------      --------

    Total Liabilities and Partners' Capital             $ 39,575      $ 50,262
                                                        ========      ========

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 12 of 32


                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)

                                               For the Years Ended December 31,
                                                   1996      1995      1994
                                                 --------  --------  --------

INCOME

  Rental income                                  $  6,209  $  8,230  $ 12,013

  Earned income, financing leases                   3,372     4,337     5,570

  Interest income, notes receivable                 1,202     1,157     1,995

  Gain on sale of securities                          977       235       118

  Equity in earnings from joint ventures, net         412       596       429

  Other income                                        754       914       464
                                                 --------  --------  --------

    Total Income                                   12,926    15,469    20,589
                                                 --------  --------  --------


EXPENSES

  Depreciation                                      3,290     5,650    13,138

  Amortization of acquisition fees                    733     1,089     2,192

  Lease related operating expenses                    296       481       760

  Management fees to General Partner                  971     1,202     1,658

  Interest expense                                   --          81       489

  Reimbursed administrative costs to
   General Partner                                    734       914       858

  Provision for losses on receivables                 338       904     1,889

  Legal expenses                                      203       326       466

  General and administrative expenses                 465       635       356
                                                 --------  --------  --------

    Total Expenses                                  7,030    11,282    21,806
                                                 --------  --------  --------


NET INCOME (LOSS) BEFORE INCOME TAXES               5,896     4,187    (1,217)

  Income tax benefit (expense) of subsidiary          (40)       41      --
                                                 --------  --------  --------

NET INCOME (LOSS)                                $  5,856  $  4,228  $ (1,217)
                                                 ========  ========  ========

NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT   $    .81  $    .41  $   (.19)
                                                 ========  ========  ========

ALLOCATION OF NET INCOME (LOSS):

  General Partner                                $    795  $  1,626  $    (12)

  Limited Partners                                  5,061     2,602    (1,205)
                                                 --------  --------  --------

                                                 $  5,856  $  4,228  $ (1,217)
                                                 ========  ========  ========

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>
<TABLE>

                                                                            Page 13 of 32


                             PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                           A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                            CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
                           (Amounts in Thousands Except for Unit Amounts)

<CAPTION>
                                      General
                                     Partner's   Limited Partners'   Unrealized   Total
                                      Amount    Units        Amount    Gains      Amount
                                     ---------  -------------------  ----------   ------
<S>                                   <C>       <C>         <C>         <C>     <C>
Balance, December 31, 1993            $   -     6,407,825   $78,119     $  -    $ 78,119

Distributions to partners ($2.40
  per limited partnership unit)         (810)          -    (15,364)       -     (16,174)

Redemptions of capital                    -       (38,405)     (403)       -        (403)

Net loss                                 (12)          -     (1,205)       -      (1,217)
                                      ------    ---------   -------     -----   --------

Balance, December 31, 1994              (822)   6,369,420    61,147        -      60,325

Distributions to partners ($2.40
  per limited partnership unit)         (804)          -    (15,258)       -     (16,062)

Redemptions of capital                    -       (50,465)     (423)       -        (423)

Net income                             1,626           -      2,602        -       4,228

Change for the year in unrealized
  gain on available-for-sale 
  securities                              -            -         -        377        377
                                      ------    ---------   -------     -----   --------

Balance, December 31, 1995                -     6,318,955    48,068       377     48,445

Distributions to partners ($2.40
  per limited partnership unit)         (795)          -    (15,085)       -     (15,880)

Redemptions of capital                    -       (76,012)     (505)       -        (505)

Net income                               795           -      5,061        -       5,856

Change for the year in unrealized
  gain on available-for-sale
  securities                             -             -         -        148        148
                                      ------    ---------   -------     -----   --------

Balance, December 31, 1996            $  -      6,242,943   $37,539     $ 525   $ 38,064
                                      ======    =========   =======     =====   ========

                             The accompanying notes are an integral part of
                                             these statements.
</TABLE>
<PAGE>


                                                                   Page 14 of 32


                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)

                                                For the Years Ended December 31,
                                                   1996      1995      1994
                                                 --------  --------  --------
Operating Activities:
  Net income (loss)                              $  5,856  $  4,228  $ (1,217)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
      Depreciation                                  3,290     5,650    13,138
      Amortization of acquisition fees                733     1,089     2,192
      Gain on sale of equipment                      (381)     (845)     (695)
      Gain on sale of securities                     (977)     (235)     (118)
      Loss on sale of assets of the cable
        television system                              64      --        --
      Equity in earnings from joint ventures, net    (412)     (596)     (429)
      Provision for early termination,
        financing leases                              352       408       718
      Provision for (recovery of) losses on
        notes receivable                              (17)      110       908
      Provision for losses on accounts receivable       3       386       263
      Decrease (increase) in accounts receivable       88       (99)      816
      Decrease in accounts payable and accrued
        expenses                                     (118)   (1,000)     (904)
      Decrease in other assets                         92       163        98
      Decrease (increase) in deferred income 
        tax asset                                      40       (40)     --
                                                 --------  --------  --------
Net cash provided by operating activities           8,613     9,219    14,770
                                                 --------  --------  --------

Investing Activities:
  Principal payments, financing leases             11,263    12,522    14,897
  Principal payments, notes receivable              3,158     4,948     8,794
  Proceeds from sale of equipment                     925     3,428     4,869
  Proceeds from sale of securities                  1,005       235       118
  Proceeds from sale of assets of the cable
    television system                                 735      --        --
  Distributions from joint ventures                   727     1,195     9,713
  Purchase of equipment                              --          (5)     (392)
  Investment in financing leases                   (6,446)   (6,424)  (14,750)
  Cable systems, property and equipment               (36)      (95)     --
  Investment in notes receivable                   (2,440)   (1,856)   (2,738)
  Investment in joint ventures                        (69)     --        (290)
  Investment in securities                            (28)     --        --
  Payment of acquisition fees                        (459)     (319)     (788)
                                                 --------  --------  --------
Net cash provided by investing activities           8,335    13,629    19,433
                                                 --------  --------  --------

Financing Activities:
  Payments of principal, notes payable               --      (3,195)  (14,311)
  Redemptions of capital                             (505)     (423)     (403)
  Distributions to partners                       (15,880)  (16,062)  (16,174)
                                                 --------  --------  --------
Net cash used by financing activities             (16,385)  (19,680)  (30,888)
                                                 --------  --------  --------

Increase in cash and cash equivalents                 563     3,168     3,315

Cash and cash equivalents, beginning of period     11,571     8,403     5,088
                                                 --------  --------  --------

Cash and cash equivalents, end of period         $ 12,134  $ 11,571  $  8,403
                                                 ========  ========  ========

Supplemental Cash Flow Information:
  Cash paid for interest expense                 $   --    $     81  $    504

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 15 of 32


                   PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996


Note 1.    Organization and Partnership Matters.

        Phoenix  Leasing  Cash  Distribution  Fund  IV,  a  California   limited
partnership (the Partnership), was formed on July 14, 1989, to invest in capital
equipment  of various  types and to lease  such  equipment  to third  parties on
either a long-term or short-term basis and provide  financing to emerging growth
companies and cable television system operators. The Partnership met its minimum
investment requirements on January 12, 1990. The Partnership's  termination date
is December 31, 2000.

        The  Partnership  has  also  made  investments  in joint  ventures  with
affiliated  partnerships  managed  by the  General  Partner  for the  purpose of
reducing the risks of financing or acquiring certain capital equipment leased to
third parties (see Note 6).

        On December 23, 1994, the Partnership foreclosed upon a cable television
system in Arizona that was in default on a loan payable to the Partnership  with
a carrying amount of approximately  $885,000 which was carried over to the basis
in the cable system.  Phoenix  Westcom  Cablevision,  Inc. (the  Subsidiary),  a
wholly owned subsidiary of the Partnership,  was formed under the laws of Nevada
on August 5, 1994 to own and operate the  foreclosed  cable  television  system.
Phoenix  Westcom  Cablevision,   Inc.  is  a  wholly-owned   subsidiary  of  the
Partnership  (hereinafter,  the Partnership and the Subsidiary are  collectively
referred  to as  the  Consolidated  Partnership).  The  acquisition  of  Westcom
Cablevision by the Subsidiary  through  foreclosure  was accounted for using the
"purchase  method" of accounting in which the net carrying value of the loan was
allocated to the net assets in accordance with the relative fair market value of
the assets acquired and liabilities assumed.

        On October 23, 1996, Phoenix Westcom  Cablevision,  Inc. sold the assets
used in the operation of the cable  television  system receiving net proceeds of
approximately  $735,000,  recognizing a loss on sale of the assets of this cable
television  system of $64,000.  As a result of the sale of the cable  television
system's assets, the Subsidiary ceased operations.

        For financial reporting purposes,  Partnership income shall be allocated
as follows:  (a) first,  to the General  Partner until the cumulative  income so
allocated is equal to the cumulative  distributions to the General Partner,  (b)
second, one percent to the General Partner and 99% to the Limited Partners until
the cumulative  income so allocated is equal to any cumulative  Partnership loss
and syndication  expenses for the current and all prior accounting periods,  and
(c) the balance,  if any, to the Unit Holders.  All Partnership  losses shall be
allocated one percent to the General Partner and 99% to the Unit Holders.

        The  General  Partner is entitled  to receive  five  percent of all cash
distributions  until the Limited  Partners have recovered  their initial capital
contributions plus a cumulative return of twelve percent per annum.  Thereafter,
the General Partner will receive 15% of all cash  distributions.  From inception
of the Partnership  until December 31, 1996, the General  Partner's  interest in
Cash Available for  Distribution is  subordinated in any calendar  quarter until
the Limited Partners receive quarterly  distributions  equal to three percent of
their  Capital  Contributions  (i.e.,  12% per annum),  prorated for any partial
period.

        In the event the General  Partner  has a deficit  balance in its capital
account  at the  time  of  Partnership  liquidation,  it  will  be  required  to
contribute the amount of such deficit to the Partnership.

        As compensation for management services subject to certain  limitations,
the General Partner  receives a fee,  payable  quarterly,  in an amount equal to
3.5% of the Partnership's gross revenues for the quarter from which such payment
is being made,  which  revenues  shall  include,  but are not limited to, rental
receipts,  maintenance  fees,  proceeds  from the sale of equipment and interest
income.

        The General  Partner  will be  compensated  for  services  performed  in
connection  with the  analysis  of  assets  available  to the  Partnership,  the
selection  of such  assets  and the  acquisition  thereof,  including  obtaining
lessees for the equipment,  negotiating and concluding  master lease  agreements
with certain lessees. As compensation for such acquisition services, the General


<PAGE>


                                                                   Page 16 of 32


Partner  will  receive  a  fee  equal  to  four  percent,   subject  to  certain
limitations,  of (a) the purchase price of equipment acquired by the Partnership
or equipment leased by manufacturers, the financing for which is provided by the
Partnership,  or (b) financing  provided to businesses such as cable  operators,
emerging growth companies, or other businesses, payable upon such acquisition or
financing,  as the case may be.  Acquisition fees are amortized over the life of
the assets principally on a straight-line basis.

        Phoenix  Cable  Management  Inc.  (PCMI),  an  affiliate  of the General
Partner,  provided  day  to day  management  services  in  connection  with  the
operation of the Subsidiary.  The Subsidiary paid a management fee equal to four
and one-half  percent of the System's  monthly gross revenue for these services.
Revenues subject to a management fee at the Subsidiary level were not subject to
management fees at the Partnership level.

        A schedule of compensation  paid and  distributions  made to the General
Partner and affiliate for the years ended December 31, follows:

                                            1996       1995      1994
                                          -------    -------   -------
                                              (Amounts in Thousands)
      Management fees                     $   971    $ 1,202   $ 1,658
      Acquisition fees                        355        329       715
      Cash distributions                      795        804       810
                                          -------    -------   -------

                                          $ 2,121    $ 2,335   $ 3,183
                                          =======    =======   =======


Note 2.    Summary of Significant Accounting Policies.

      Principles  of  Consolidation.   The  1996,  1995  and  1994  consolidated
financial   statements   include  the  accounts  of  the   Partnership  and  its
wholly-owned  subsidiary,  Phoenix Westcom Cablevision,  Inc., since the date of
acquisition,  December  23,  1994.  All  significant  intercompany  accounts and
transactions have been eliminated in consolidation.

      Leasing Operations.  The Partnership's  leasing operations consist of both
financing and operating  leases.  The financing  method of accounting for leases
records as  unearned  income at the  inception  of the lease,  the excess of net
rentals  receivable  and estimated  residual value at the end of the lease term,
over the cost of equipment leased. Unearned income is credited to income monthly
over the term of the lease on a declining basis to provide an approximate  level
rate of return on the unrecovered  cost of the investment.  Initial direct costs
of  consummating  new  leases  are  capitalized  and  included  in the  cost  of
equipment.  The  Partnership  reviews its  estimates of residual  value at least
annually.  If a decline in value has occurred which is other than  temporary,  a
reduction in the investment is recognized currently.

        Under  the  operating  method  of  accounting  for  leases,  the  leased
equipment  is recorded as an asset at cost and  depreciated.  The  Partnership's
leased  equipment is depreciated  primarily  using an  accelerated  depreciation
method over the estimated useful life of six years.

        The Partnership's policy is to review periodically the expected economic
life of its rental equipment in order to determine the probability of recovering
its  undepreciated  cost. Such reviews address,  among other things,  recent and
anticipated   technological   developments   affecting  computer  equipment  and
competitive factors within the computer marketplace. Although remarketing rental
rates  are  expected  to  decline  in the  future  with  respect  to some of the
Partnership's  rental  equipment,  such rentals are expected to exceed projected
expenses  including  depreciation.  Where  reviews  of the  equipment  portfolio
indicate that rentals plus  anticipated  sales proceeds will not exceed expenses
in any future period,  the Partnership  revises its depreciation  policy and may
provide  additional  depreciation as  appropriate.  As a result of such periodic
reviews, the Partnership  provided additional  depreciation expense of $544,000,
$679,000,  and $1,579,000 ($.09, $.11 and $.25 per limited partnership unit) for
the years ended December 31, 1996, 1995 and 1994, respectively.

        Rental income for the year is determined on the basis of rental payments
due for the period under the terms of the lease. Maintenance,  repairs and minor
renewals of the leased equipment are charged to expense.

      Cable  Television  System  Operations.   The  consolidated   statement  of
operations includes the operating activity of the Subsidiary for the years ended
December  31,  1996  and 1995 and for the  period  from the date of  acquisition
(December  23, 1994) to December 31, 1994.  The  Subsidiary's  cable  operations
consisted  of a cable  system  located in the counties of Maricopa and Mohave in
the State of Arizona and  consisted of headend  equipment  and 69 miles of plant
passing,  approximately 2,060 homes and approximately 737 cable subscribers. The


<PAGE>


                                                                   Page 17 of 32


Subsidiary's  cable  television  system  served the  communities  of Cave Creek,
Perryville and Peach Springs.  The Subsidiary  operated under four non-exclusive
franchise  agreements  with the Town of Cave  Creek,  Maricopa  County,  Yavapai
County and the Hualapai Tribe in Mohave County.

      As of December 31, 1995,  the  Consolidated  Partnership  held $909,000 in
property,  cable system and equipment which has been included in Other Assets on
the balance sheet.  Property,  cable system and equipment were depreciated using
the  straight-line  method over the estimated service lives ranging from five to
10  years.   Replacements,   renewals  and  improvements  were  capitalized  and
maintenance and repairs were charged to expense as incurred.

      Cable  television  services  were billed  monthly in advance.  Revenue was
deferred and recognized as the services were provided.

      Investments in Joint Ventures.  Minority  investments in net assets of the
equipment,  financing and foreclosed  cable systems joint  ventures  reflect the
Consolidated Partnership's equity basis in the ventures. Under the equity method
of  accounting,  the  original  investment  is  recorded at cost and is adjusted
periodically  to recognize  the  Consolidated  Partnership's  share of earnings,
losses, cash contributions and cash distributions after the date of acquisition.

      Investment  in   Available-for-Sale   Securities.   The   Partnership  has
investments  in  stock  warrants  in  public  companies.   The  Partnership  has
classified its investments in stock warrants as available-for-sale in accordance
with FASB  Statement No. 115,  "Accounting  for Certain  Investments in Debt and
Equity  Securities."  Available-for-sale  securities  are  stated at their  fair
market value, with unrealized gains and losses reported as a separate  component
of partners' capital. The stock warrants held by the Partnership were granted by
certain lessees or borrowers as additional compensation for leasing or financing
equipment.  At the date of grant,  such warrants were determined to have no fair
market value and were recorded at their historical cost of $0.

      Notes  Receivable.   Notes  receivable   generally  are  stated  at  their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.

      Impaired Notes Receivable.  Generally,  notes receivable are classified as
impaired  and the  accrual of interest  on such notes is  discontinued  when the
contractual  payment of  principal  or  interest  has become 90 days past due or
management has serious doubts about further  collectibility  of the  contractual
payments,  even  though  the  loan  may  currently  be  performing.  When a note
receivable is classified as impaired,  income  recognition is discontinued.  Any
payments  received  subsequent  to the  placement of the note  receivable  on to
impaired  status  will  generally  be  applied  towards  the  reduction  of  the
outstanding  note  receivable  balance,  which may  include  previously  accrued
interest as well as principal.  Once the principal and accrued  interest balance
has been reduced to zero,  the  remaining  payments  will be applied to interest
income.  Generally,  notes  receivable  are restored to accrual  status when the
obligation is brought current,  has performed in accordance with the contractual
terms for a  reasonable  period of time and the ultimate  collectibility  of the
total contractual principal and interest is no longer in doubt.

      Allowance  for Losses.  An  allowance  for losses is  established  through
provisions for losses charged  against  income.  Notes  receivable  deemed to be
uncollectible  are charged  against the  allowance  for losses,  and  subsequent
recoveries, if any, are credited to the allowance.

      Reclassification.  Certain 1995 and 1994 amounts have been reclassified to
conform to the 1996 presentation.

      Cash and Cash Equivalents.  Cash and cash equivalents  include deposits at
banks,  investments  in money market funds and other  highly  liquid  short-term
investments  with  original  maturities  of less than 90 days.  The  Partnership
places its cash deposits in temporary cash investments with credit worthy,  high
quality  financial  institutions.  The  concentration  of such cash deposits and
temporary  cash  investments  is not deemed to create a significant  risk to the
Partnership.

      Non-Cash Investing  Activities.  During 1996, the Partnership,  along with
other affiliated partnerships managed by the General Partner,  obtained title to
a  cable  television   company  that  had  been  pledged  as  collateral  for  a
non-performing  note.  As a result,  the  Partnership  reclassified  $73,000  to
Investment in Joint Ventures on the balance sheet.

      During the year ended December 31, 1996 and 1995, the Partnership recorded
an unrealized  gain on  available-for-sale securities which has been included in
Other Assets of $148,000 and $377,000, respectively.

      During 1995, the  Partnership  foreclosed on a note  receivable  which was
reclassified  from Notes  Receivable  to  Investment  in Joint  Ventures  on the
balance sheet. The amount of such reclassification was $230,000.

<PAGE>


                                                                   Page 18 of 32


      Credit and Collateral. The Partnership's activities have been concentrated
in the  equipment  leasing  and  financing  industry.  A  credit  evaluation  is
performed  by the  General  Partner  for all  leases  and loans  made,  with the
collateral  requirements  determined on a case-by-case  basis. The Partnership's
loans are  generally  secured by the  equipment or assets  financed and, in some
cases,  other  collateral  of  the  borrower.  In  the  event  of  default,  the
Partnership  has the right to foreclose upon the collateral  used to secure such
loans.

      Use of Estimates.  The  preparation of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.


Note 3.    Accounts Receivable.

      Accounts receivable consist of the following at December 31:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Lease payments                                     $   763   $   891
        Reimbursement for property taxes                       122       181
        General Partners and Affiliates                          7        39
        Other                                                   16        40
                                                           -------   -------
                                                               908     1,151
        Less:  allowance for losses on
                accounts receivable                           (424)     (548)
                                                           -------   -------

           Total                                           $   484   $   603
                                                           =======   =======


Note 4.    Notes Receivable.

      Notes receivable consist of the following at December 31:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Notes receivable from emerging growth
         companies, with stated interest ranging
         from 10% to 21% per annum, receivable in
         installments ranging from 31 to 60 months,
         collateralized by a security interest in
         the equipment financed.                           $ 4,941   $ 4,584

        Notes receivable from cable television system
         operators with stated interest ranging from 11%
         to 13% per annum, receivable in installments
         ranging from 78 to 96 months, collateralized by
         a security interest in the cable system assets
         These notes have a graduated repayment schedule
         followed with a balloon payment.                      524     1,332

        Notes receivable from other businesses with
         stated interest ranging from 14% to 16% per
         annum, receivable in installments ranging from
         36 to 85 months, collateralized by the equipment
         financed.                                           1,413     1,753
                                                           -------   -------
                                                             6,878     7,669

        Less:  allowance for losses on notes receivable     (2,224)   (2,241)
                                                           -------   -------

        Total                                              $ 4,654   $ 5,428
                                                           =======   =======

        The Partnership's  notes receivable to cable television system operators
provide  for a  monthly  payment  rate  in an  amount  that  is  less  than  the
contractual  interest  rate.  The  difference  between the payment  rate and the
contractual interest rate is added to the principal and therefore deferred until
the maturity date of the note. Upon maturity of the note, the original principal
and  deferred  interest is due and  payable in full.  Although  the  contractual

<PAGE>


                                                                   Page 19 of 32


interest  rates may be higher,  the amount of interest  being  recognized on the
Partnership's  outstanding notes receivable to cable television system operators
is being limited to the amount of the payments  received,  thereby deferring the
recognition of a portion of the deferred interest until the loan is paid off.

        At  December  31,  1996,  the  recorded  investment  in  notes  that are
considered to be impaired was $2,060,000.  Included in this amount is $1,938,000
of impaired  notes for which the related  allowance for losses is $1,916,000 and
$122,000 of impaired notes for which there is no allowance. The average recorded
investment  in  impaired  loans  during the year  ended  December  31,  1996 was
approximately $2,479,000. The Partnership recognized $287,000 of interest income
on impaired notes receivable during the year ended December 31, 1996.

        At  December  31,  1995,  the  recorded  investment  in  notes  that are
considered to be impaired was $2,747,000.  Included in this amount is $2,086,000
of impaired notes for which the related  allowance for losses was $1,818,000 and
$661,000  of  impaired  notes for  which  there was no  allowance.  The  average
recorded  investment in impaired  loans during the year ended  December 31, 1995
was approximately  $3,490,000.  The Partnership  recognized $107,000 of interest
income on impaired notes receivable during the year ended December 31, 1995.

        On February 14, 1996, the  Partnership  foreclosed  upon a nonperforming
outstanding  note  receivable  to  a  cable  television  operator  to  whom  the
Partnership,  along with other  affiliated  partnerships  managed by the General
Partner,  had extended credit.  Upon foreclosure,  this note was reclassified to
Investment  in Joint  Ventures  on the  balance  sheet.  The  Partnership's  net
carrying value for this outstanding  note receivable was $73,000,  for which the
Partnership  had an allowance for losses on notes of $17,000.  This allowance of
$17,000 was reversed and recognized as income during the year ended December 31,
1996. This joint venture  subsequently  sold the cable system on August 30, 1996
at a small gain.

        During the year ended  December 31,  1996,  the  Partnership  received a
settlement  on one of its  notes  receivable  from  a  cable  television  system
operator  which was  considered  to be  impaired.  The  Partnership  received  a
recovery  of  $856,000  as a  settlement  which  was  applied  to  the  $605,000
outstanding  note  receivable   balance  and  the  difference  of  $251,000  was
recognized  as  interest  income  from  notes  receivable  during the year ended
December 31, 1996.

        The Partnership received payoffs during the year ended December 31, 1995
from  three of its  impaired  notes  receivable  from  cable  television  system
operators and foreclosed upon the assets of another note receivable from a cable
television operator.

        The activity in the allowance for losses on notes receivable  during the
years ended December 31, is as follows:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Beginning balance                                  $ 2,241   $ 2,264
           Provision for (recovery of) losses                  (17)      110
           Write downs                                        --        (133)
                                                           -------   -------
        Ending balance                                     $ 2,224   $ 2,241
                                                           =======   =======


Note 5.    Equipment on Operating Leases and Investment in Financing Leases.

        Equipment  on lease  consists  primarily of computer  peripheral,  small
computers and other capital equipment.

        The  Partnership's  operating  leases  are for  initial  lease  terms of
approximately 24 to 48 months.  During the remaining terms of existing operating
leases,  the  Partnership  will not  recover all of the  undepreciated  cost and
related expenses of its rental equipment,  and therefore must remarket a portion
of its equipment in future years.

        The  Partnership  has  entered  into  direct  lease   arrangements  with
businesses  in  different  industries  located  throughout  the  United  States.
Generally,  it is the  responsibility  of the lessee to provide  maintenance  on
leased  equipment.  The General Partner  administers the equipment  portfolio of
leases acquired through the direct leasing program.  Administration includes the
collection of rents from the lessees and remarketing of the equipment.



<PAGE>


                                                                   Page 20 of 32


        The net  investment  in financing  leases  consists of the  following at
December 31:

                                                             1996      1995
                                                           --------  --------
                                                         (Amounts in Thousands)

        Minimum lease payments to be received              $ 21,308  $ 30,719
        Estimated residual value of leased equipment
         (ungaranteed)                                            9        22
        Less: unearned income                                (3,403)   (5,301)
              allowance for early termination                  (941)     (755)
                                                           --------  --------

        Net investment in financing leases                 $ 16,973  $ 24,685
                                                           ========  ========

        Minimum rentals to be received on noncancellable operating and financing
leases for the years ended December 31 are as follows:

                                                          Operating  Financing
                                                          ---------  ---------
                                                          (Amounts in Thousands)

        1997...........................................    $  1,395  $ 10,280
        1998...........................................         844     6,679
        1999...........................................         596     3,344
        2000...........................................         217       879
        2001...........................................           7       126
                                                           --------  --------

        Total                                              $  3,059  $ 21,308
                                                           ========  ========

        The net book value of equipment  held for lease at December 31, 1996 and
1995 amounted to $1,015,000 and $997,000, respectively.


Note 6.    Investment in Joint Ventures.

Equipment Joint Venture.

        On August 1, 1994, the Partnership  entered into an agreement along with
two other affiliated  partnerships to contribute certain leased assets and notes
receivable (the "Assets") to Phoenix  Acceptance  Limited Liability  Company,  a
Delaware  limited  liability  company  (the "Joint  Venture")  in exchange for a
44.97% equity interest in the Joint Venture.  The interest received in the Joint
Venture  was  accounted  for  at  the  historical   cost  basis  of  the  Assets
transferred.  The Partnership has accounted for its net investment in this Joint
Venture using the equity method of  accounting.  The Joint Venture was organized
to hold title to the assets and subsequently transfer such assets to a trust for
the purpose of the trust  issuing two classes of lease  backed  certificates  to
third parties in exchange for cash proceeds.  The transaction  between the Joint
Venture and the trust has been  accounted  for as a financing  arrangement.  The
Joint Venture retains a residual interest in the assets transferred  through the
ownership of a third class of subordinated trust certificates.  The lease backed
certificates  are  recourse  only  to  the  assets  used  to  collateralize  the
obligation.

        The net carrying value of such assets  contributed by the Partnership to
the Joint Venture was  approximately  $11.2 million and the total carrying value
of all of the assets  contributed by all three  partnerships  approximated $24.7
million. The net proceeds from the issuance of the lease backed certificates are
being distributed back to the partnerships who contributed to the Joint Venture.
On August 5, 1994, the Joint Venture received  proceeds from the issuance of the
7.10%  Class A lease  backed  certificates  in the  principal  amount  of  $18.5
million.  On August 12,  1994,  the Joint  Venture  received  proceeds  from the
issuance of the 8.25% Class B lease backed  certificates in the principal amount
of $5.3  million.  The lease backed  certificates  were paid in full in November
1996.

        The Equipment  Joint Venture  owned by the  Partnership,  along with its
percentage ownership is as follows:

                                                               Weighted
        Joint Venture                                     Percentage Interest
        -------------                                     -------------------

        Phoenix Acceptance Limited Liability Company             44.97%



<PAGE>


                                                                   Page 21 of 32

<TABLE>
        An analysis  of the  Partnership's  investment  in the  Equipment  Joint Venture is as follows:
<CAPTION>
                      Net Investment                                               Net Investment
                       at Beginning                    Equity in                       at End
Date                    of Period      Contributions   Earnings     Distributions    of Period
----                  --------------   -------------   ---------    -------------  --------------
                                              (Amounts in Thousands)
<S>                       <C>             <C>           <C>            <C>              <C>
Year Ended
  December 31, 1994       $  -            $11,224       $ 408          $ 9,658          $1,974
                          ======          =======       =====          =======          ======

Year Ended
  December 31, 1995       $1,974          $  -          $ 533          $   850          $1,657
                          ======          =======       =====          =======          ======

Year Ended
  December 31, 1996       $1,657          $    69       $ 393          $   483          $1,636
                          ======          =======       =====          =======          ======
</TABLE>
        The aggregate financial information of the Equipment Joint Venture as of
December 31 and for the years then ended is presented as follows:

                                  BALANCE SHEET

                                     ASSETS

                                                              December 31,
                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Cash and cash equivalents                          $   490   $ 1,384
        Accounts receivable                                     59        14
        Equipment on operating lease                           155       347
        Net investment in finance leases                     2,930     8,816
        Other assets                                           368     1,018
                                                           -------   -------

           Total Assets                                    $ 4,002   $11,579
                                                           =======   =======


                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $   382   $   761
        Lease backed certificates                             --       7,150
        Partners' capital                                    3,620     3,668
                                                           -------   -------

           Total Liabilities and Partners' Capital         $ 4,002   $11,579
                                                           =======   =======


                             STATEMENT OF OPERATIONS

                                     INCOME

                                                     For the Years Ended
                                                         December 31,
                                                   1996      1995      1994
                                                 -------   -------   -------
                                                    (Amounts in Thousands)


        Earned income, financing leases          $   855   $ 1,924   $ 1,515
        Rental income                                536       196      --
        Gain on sale of equipment                    453       465        26
        Other income                                 181       361       239
                                                 -------   -------   -------

           Total Income                            2,025     2,946     1,780
                                                 -------   -------   -------



<PAGE>


                                                                   Page 22 of 32


                                            EXPENSES

        Depreciation                                 261       104         4
        Management fee to the General Partner        284       283       192
        Interest expense                             221       924       633
        Other expenses                               383       450        43
                                                 -------   -------   -------

           Total Expenses                          1,149     1,761       872
                                                 -------   -------   -------

           Net Income                            $   876   $ 1,185   $   908
                                                 =======   =======   =======

        As of December 31, 1996 and 1995 the  Partnership's pro rata interest in
the Equipment Joint  Venture's net book value of off-lease  equipment was $2,000
and $11,000, respectively.

        The General Partner earns a management fee of 3.5% of the  Partnership's
respective  interest  in  gross  revenues  of the  Equipment  Joint  Venture.  A
management fee of $743,000  based on cash  distributed to the venturers was paid
to the  General  Partner  in 1994.  Such fees have  been  capitalized  and fully
amortized.  Cash proceeds subject to a management fee at the joint venture level
are not subject to management fees at the Partnership level.

Financing Joint Venture.

        The  Partnership  owns an interest in a Financing  Joint  Venture.  This
investment  is accounted for using the equity  method of  accounting.  The other
partners  of the  venture  are  entities  organized  and  managed by the General
Partner.

        The  following  information  summarizes  the  Partnership's   respective
interest in the Financing Joint Venture.

                                                            Weighted
            Joint Venture                             Percentage Interest
            -------------                             -------------------

        Phoenix Joint Venture 1994-2                         25.00%
<TABLE>
        An analysis of the  Partnership's  investment  account in the  Financing Joint Venture is as follows:
<CAPTION>
                      Net Investment                                                 Net Investment
                       at Beginning                    Equity in                         at End
Date                    of Period      Contributions   Earnings     Distributions       of Period
----                  --------------   -------------   ---------    -------------    --------------
                                                   (Amounts in Thousands)
<S>                       <C>              <C>           <C>             <C>             <C>       
Year Ended
  December 31, 1994       $ -              $290          $  1            $-              $ 291
                          =====            ====          ====            ====            =====

Year Ended
  December 31, 1995       $ 291            $-            $ 44            $ 64            $ 271
                          =====            ====          ====            ====            =====

Year Ended
  December 31, 1996       $ 271            $-            $ 39            $ 86            $ 224
                          =====            ====          ====            ====            =====
</TABLE>
        The aggregate financial information of the Financing Joint Venture as of
December 31 and for the years then ended is presented as follows:



<PAGE>


                                                                   Page 23 of 32


                                  BALANCE SHEET

                                     ASSETS

                                                              December 31,
                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Cash and cash equivalents                          $   155   $   271
        Notes receivable, net                                  823       977
        Accounts receivable                                     14        11
        Other assets                                            31        37
                                                           -------   -------

           Total Assets                                    $ 1,023   $ 1,296
                                                           =======   =======


                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $   130   $   215
        Partners' capital                                      893     1,081
                                                           -------   -------

           Total Liabilities and Partners' Capital         $ 1,023   $ 1,296
                                                           =======   =======


                             STATEMENT OF OPERATIONS

                                     INCOME
                                                     For the Years Ended
                                                         December 31,
                                                   1996      1995      1994
                                                 -------   -------   -------
                                                   (Amounts in Thousands)

        Interest Income                          $   158   $   187   $     2
        Other income                                   4         2      --
                                                 -------   -------   -------

           Total Income                              162       189   $     2
                                                 -------   -------   -------

                                    EXPENSES

        Management fee to the General Partner          6         7      --
        Other expenses                              --           6         1
                                                 -------   -------   -------

           Total Expenses                              6        13         1
                                                 -------   -------   -------

           Net Income                            $   156   $   176   $     1
                                                 =======   =======   =======

        The General Partner earns a management fee of 3.5% of the  Partnership's
respective  interest in gross payments received for the Financing Joint Venture.
Revenues  subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level.

Foreclosed Cable Systems Joint Ventures.

        The  Partnership  owns an interest in  foreclosed  cable  systems  joint
ventures along with other  partnerships  managed by the General  Partner and its
affiliates.  The Partnership  foreclosed upon  nonperforming  outstanding  notes
receivable to cable  television  operators to whom the  Partnership,  along with
other  affiliated  partnerships  managed by the General  Partner,  had  extended
credit. The partnerships'  notes receivables were exchanged for interests (their
capital contribution), on a pro rata basis, in newly formed joint ventures owned
by the  partnerships  and  managed by the  General  Partner.  Title to the cable
television  systems  is  held  by the  joint  ventures.  These  investments  are
accounted for using the equity method of accounting.



<PAGE>


                                                                   Page 24 of 32


                                                              Weighted
            Joint Venture                               Percentage Interest
            -------------                               -------------------

        Phoenix Pacific Northwest Cable J.V.                   37.22%
        Phoenix Country Cable J.V. (1)                         46.65
        Phoenix Independence Cable, LLC                        43.69
        Phoenix Grassroots Cable System, LLC (2)                 .80

(1) Cable system sold in 1995 and joint venture closed in 1996.
(2) Cable system sold in 1996.
<TABLE>
<CAPTION>
                      Net Investment                   Equity in                    Net Investment
                       at Beginning                    Earnings                          at End
Date                    of Period      Contributions   (Losses)      Distributions     of Period
----                  --------------   -------------   ---------     -------------  --------------
                                                   (Amounts in Thousands)
<S>                        <C>            <C>            <C>             <C>            <C>    
Year Ended
  December 31, 1994        $ 591          $ -            $  20           $  55          $  556
                           =====          =====          =====           =====          ======

Year Ended
  December 31, 1995        $ 556          $ 229          $  19           $ 281          $  523
                           =====          =====          =====           =====          ======

Year Ended
  December 31, 1996        $ 523          $  73          $ (20)          $ 158          $  418
                           =====          =====          ======          =====          ======
</TABLE>
        The aggregate  combined  financial  information of the foreclosed  cable
systems  joint  ventures  as of  December  31 and for the  years  then  ended is
presented as follows:

                             COMBINED BALANCE SHEETS

                                     ASSETS

                                                              December 31,
                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Cash and cash equivalents                          $   166   $   181
        Accounts receivable                                     32        29
        Property, plant and equipment                        1,128     1,178
        Other                                                    4         3
                                                           -------   -------

           Total Assets                                    $ 1,330   $ 1,391
                                                           =======   =======

                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $   197   $    98
        Partners' capital                                    1,133     1,293
                                                           -------   -------

           Total Liabilities and Partners' Capital         $ 1,330   $ 1,391
                                                           =======   =======




<PAGE>


                                                                   Page 25 of 32


                        COMBINED STATEMENTS OF OPERATIONS

                                     INCOME

                                               For the Years Ended December 31,
                                                   1996      1995      1994
                                                 -------   -------   -------
                                                    (Amounts in Thousands)

        Subscriber revenue                       $ 1,961   $   479   $   433
        Gain on sale of cable systems                173        25      --
        Other income                                  34         6         2
                                                 -------   -------   -------

           Total Income                            2,168       510       435
                                                 -------   -------   -------

                                    EXPENSES

        Depreciation and amortization                608       120       110
        Program services                             635       148       120
        Management fee to an affiliate of
          the General Partner                        409        22        19
        General and administrative expenses          541       175       128
        Provision for losses on accounts 
          receivable                                  20         5         8
                                                 -------   -------   -------

           Total Expenses                          2,213       470       385
                                                 -------   -------   -------

           Net Income (Loss)                     $   (45)  $    40   $    50
                                                 =======   =======   =======

        Phoenix  Cable  Management  Inc.  (PCMI),  an  affiliate  of the General
Partner,  provides  day  to day  management  services  in  connection  with  the
operation of the foreclosed  cable systems joint ventures.  The foreclosed cable
systems  joint  ventures  will pay a  management  fee equal to four and one-half
percent of the  System's  monthly  gross  revenue for these  services.  Revenues
subject to a management  fee at the joint  venture  level will not be subject to
management fees at the Partnership level.


Note 7.    Accounts Payable and Accrued Expenses.

        Accounts  payable  and  accrued  expenses  consist of the  following  at
December 31:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Equipment lease operations                         $   753   $   854
        General Partner and affiliates                         115       385
        Security deposits                                      362       342
        Other                                                  281       236
                                                           -------   -------
           Total                                           $ 1,511   $ 1,817
                                                           =======   =======

Note 8.    Income Taxes.

        Federal  and state  income  tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

        The net  differences  between the tax basis and the reported  amounts of
the Partnership's assets and liabilities is as follows at December 31:



<PAGE>


                                                                   Page 26 of 32


                            Reported Amounts       Tax Basis      Net Difference
                            ----------------       ---------      --------------
                                            (Amounts in Thousands)
1996
----
        Assets                  $ 39,564           $ 45,096         $ (5,532)
        Liabilities                1,500                891              609
1995
----
        Assets                  $ 50,182           $ 55,687         $ (5,505)
        Liabilities                1,736              1,112              624

        The  Subsidiary  is a  corporation  subject  to state  and  federal  tax
regulations.  The  Subsidiary  reports to the taxing  authority  on the  accrual
basis.  When  income and  expenses  are  recognized  in  different  periods  for
financial  reporting  purposes than for income tax purposes,  deferred taxes are
provided for such differences using the liability method.

        The Subsidiary's income tax benefit  (provision)  includes the following
components for the years ended December 31:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Current tax benefit                                $  --     $    58
        Deferred tax expense related to
          future taxable income, net                          --         (17)
        Provision for valuation allowance
          on net deferred tax asset                            (40)     --
                                                           -------   -------
         Income tax benefit (provision), net               $   (40)  $    41
                                                           =======   =======


Note 9.    Related Entities.

        The General  Partner  and  affiliates  serve in the  capacity of general
partner in other partnerships, all of which are engaged in the equipment leasing
and financing business.


Note 10.   Reimbursed Costs to the General Partner.

        The General Partner incurs certain  administrative  costs,  such as data
processing,   investor   and  lessee   communications,   lease   administration,
accounting,  equipment  storage  and  equipment  remarketing,  for  which  it is
reimbursed by the  Partnership.  These expenses  incurred by the General Partner
are to be  reimbursed at the lower of the actual costs or an amount equal to 90%
of the fair market value for such services.

        The  reimbursed   administrative  costs  to  the  General  Partner  were
$734,000,  $914,000 and $858,000 for the years ended December 31 1996,  1995 and
1994, respectively. The equipment storage, remarketing and data processing costs
reimbursed to the General Partner during the years ended December 31, 1996, 1995
and 1994 were $237,000, $401,000, and $665,000, respectively.


Note 11.   Net Income (Loss) and Distributions per Limited Partnership Unit.

        Net income (loss) and  distributions  per limited  partnership unit were
based on the  limited  partner's  share of  consolidated  net income  (loss) and
distributions,   and  the  weighted  average  number  of  units  outstanding  of
6,273,582,  6,346,597 and 6,392,111 for the years ended December 31, 1996,  1995
and 1994,  respectively.  For the  purposes of  allocating  consolidated  income
(loss) and  distributions to each individual  limited  partner,  the Partnership
allocates  consolidated  net  income  (loss) and  distributions  based upon each
respective limited partner's net capital contributions.


Note 12.   Subsequent Events.

        In January 1997, cash distributions of $197,000 and $2,410,000 were made
to the General and Limited Partners, respectively.




<PAGE>


                                                                   Page 27 of 32


Note 13.   Fair Value of Financial Instruments.

        The  following  methods and  assumptions  were used to estimate the fair
value of each class of financial  instrument which it is practicable to estimate
that value.

Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.

Notes Receivable
The fair  value of notes  receivable  is  estimated  based on the  lesser of the
discounted  expected  future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit  ratings,  or the estimated
fair value of the underlying collateral.

Securities, Available-for-Sale
The fair values of  investments  in available for sale  securities are estimated
based on quoted market prices.

The estimated  fair values of the  Partnership's  financial  instruments  are as
follows at December 31:

                                                      Carrying
                                                       Amount     Fair Value
                                                      --------    ----------
1996                                                  (Amounts in Thousands)
----
        Assets
           Cash and cash equivalents                  $12,134      $12,134
           Securities, available-for-sale                 525          525
           Notes receivable                             4,654        5,114

1995
----
        Assets
           Cash and cash equivalents                  $11,571      $11,571
           Securities, available-for-sale                 377          377
           Notes receivable                             5,428        6,769



<PAGE>


                                                                   Page 28 of 32


Item 9.    Disagreements on Accounting and Financial Disclosure Matters.

        None.


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.

        The registrant is a limited partnership and, therefore, has no executive
officers or directors.  The general partner of the registrant is Phoenix Leasing
Incorporated,  a California corporation. The directors and executive officers of
Phoenix Leasing Incorporated (PLI) are as follows:

        GUS  CONSTANTIN,  age 59, is President,  Chief  Executive  Officer and a
Director of PLI. Mr.  Constantin  received a B.S. degree in Engineering from the
University of Michigan and a Master's Degree in Management Science from Columbia
University.  From 1969 to 1972,  he served as Director,  Computer and  Technical
Equipment of DCL Incorporated  (formerly Diebold Computer Leasing Incorporated),
a  corporation  formerly  listed on the  American  Stock  Exchange,  and as Vice
President  and  General  Manager  of DCL  Capital  Corporation,  a  wholly-owned
subsidiary of DCL Incorporated. Mr. Constantin was actively engaged in marketing
manufacturer  leasing programs to computer and medical  equipment  manufacturers
and in directing DCL Incorporated's IBM System/370 marketing  activities.  Prior
to  1969,  Mr.  Constantin  was  employed  by IBM as a data  processing  systems
engineer for four years. Mr. Constantin is an individual general partner in four
active partnerships and is an NASD registered  principal.  Mr. Constantin is the
founder of PLI and the  beneficial  owner of all of the common  stock of Phoenix
American Incorporated.

        PARITOSH K. CHOKSI,  age 43, is Senior Vice  President,  Chief Financial
Officer,  Treasurer and a Director of PLI. He has been associated with PLI since
1977.  Mr. Choksi  oversees the finance,  accounting,  information  services and
systems  development  departments of the General  Partner and its Affiliates and
oversees the structuring,  planning and monitoring of the partnerships sponsored
by the General Partner and its Affiliates.  Mr. Choksi graduated from the Indian
Institute of Technology, Bombay, India with a degree in Engineering. He holds an
M.B.A. degree from the University of California, Berkeley.

        GARY W.  MARTINEZ,  age 46, is Senior Vice  President  and a Director of
PLI. He has been associated with PLI since 1976. He manages the Asset Management
Department,  which is responsible for lease and loan portfolio management.  This
includes credit analysis,  contract terms, documentation and funding; remittance
application,  change processing and maintenance of customer  accounts;  customer
service, invoicing,  collection,  settlements and litigation;  negotiating lease
renewals,  extensions,  sales and buyouts; and management information reporting.
From 1973 to 1976, Mr.  Martinez was a Loan Officer with Crocker  National Bank,
San  Francisco.  Prior to 1973,  he was an Area Manager with  Pennsylvania  Life
Insurance  Company.  Mr. Martinez is a graduate of California State  University,
Chico.

        BRYANT J. TONG, age 42, is Senior Vice President,  Financial  Operations
of PLI. He has been with PLI since 1982.  Mr. Tong is  responsible  for investor
services and overall company  financial  operations.  He is also responsible for
the technical and  administrative  operations of the cash management,  corporate
accounting,  partnership accounting,  accounting systems,  internal controls and
tax  departments,  in addition to Securities  and Exchange  Commission and other
regulatory  agency  reporting.  Prior to his association  with PLI, Mr. Tong was
Controller-Partnership  Accounting with the Robert A. McNeil Corporation for two
years and was an auditor with Ernst & Whinney  (succeeded by Ernst & Young) from
1977 through 1980.  Mr. Tong holds a B.S. in Accounting  from the  University of
California, Berkeley, and is a Certified Public Accountant.

        CYNTHIA  E.  PARKS,  age 41,  is Vice  President,  General  Counsel  and
Assistant  Secretary  of PLI.  Prior to joining  PLI in 1984,  she was with GATX
Leasing  Corporation,  and had  previously  been  Corporate  Counsel  for  Stone
Financial  Companies,  and an Assistant  Vice  President of the Bank of America,
Bank Amerilease  Group. She has a bachelor's degree from Santa Clara University,
and earned her J.D. from the University of San Francisco School of Law.

        Neither the General  Partner  nor any  Executive  Officer of the General
Partner has any family relationship with the others.

        Phoenix  Leasing  Incorporated  or  its  affiliates  and  the  executive
officers of the General  Partner  serve in a similar  capacity to the  following
affiliated limited partnerships:

           Phoenix Leasing American Business Fund, L.P.
           Phoenix Leasing Cash Distribution Fund V, L.P.
           Phoenix Income Fund, L.P.
           Phoenix High Tech/High Yield Fund
           Phoenix Leasing Cash Distribution Fund III
           Phoenix Leasing Cash Distribution Fund II
<PAGE>

                                                                   Page 29 of 32

           Phoenix Leasing Income Fund VII
           Phoenix Leasing Income Fund VI
           Phoenix Leasing Growth Fund 1982 and
           Phoenix Leasing Income Fund 1977


Item 11.   Executive Compensation.
<TABLE>
        Set forth is the information relating to all direct remuneration paid or accrued by the Registrant
during the last year to the General  Partner and its affiliate.

        (A)                 (B)                              (C)                               (D)
<CAPTION>
                                                      Cash and cash-                     Aggregate of
Name of Individual      Capacities in                 equivalent forms                   contingent forms
or persons in group     which served                  of remuneration                    of remuneration
-------------------     -------------    ----------------------------------------------  ----------------
                                                   (C1)                 (C2)
                                                                  Securities or property
                                       Salaries, fees, directors' insurance benefits or
                                       fees, commissions, and     reimbursement, personal
                                       bonuses                    benefits
                                       -------------------------- -----------------------
                                                    (Amounts in Thousands)
<S>                     <C>                   <C>                          <C>                <C>
Phoenix Leasing
  Incorporated          General Partner       $  1,291(1)                  $ 0                $  0

Phoenix Cable           Manager                     35(2)                    0                   0
 Management, Inc.                             --------                     ---                ----

                                              $  1,326                     $ 0                $  0
                                              ========                     ===                ====
</TABLE>
(1)  consists of management and acquisition fees.
(2)  consists of management fees.


Item 12.   Security Ownership of Certain Beneficial Owners and Management.

        (a)No  person  owns of  record,  or is  known by the  Registrant  to own
           beneficially,   more  than  five  percent  of  any  class  of  voting
           securities of the Registrant.

        (b)The General Partner of the Registrant  owns the equity  securities of
           the Registrant set forth in the following table:

             (1)                          (2)                          (3)
        Title of Class         Amount Beneficially Owned       Percent of Class
        --------------         -------------------------       ----------------

    General Partner Interest   Represents a 5% interest in            100%
                               the Registrant's profits    
                               and distributions, until the
                               Limited Partners have recovered
                               their capital contributions plus
                               a cumulative return of 12% per
                               annum, compounded quarterly, on
                               the unrecovered portion thereof.
                               Thereafter, the General Partner
                               will receive 15% interest in the
                               Registrant's profits and
                               distributions.

    Limited Partner Interest   1,100 units                            .02


Item 13.   Certain Relationships and Related Transactions.

        None.



<PAGE>


                                                                   Page 30 of 32


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

                                                                       Page No.
                                                                       --------
(a)     1. Financial Statements:

           Consolidated Balance Sheets as of December 31, 1996 
             and 1995                                                      11
           Consolidated Statements of Operations for the Years
             Ended December 31, 1996, 1995 and 1994                        12
           Consolidated Statements of Partners' Capital for the
             Years Ended December 31, 1996, 1995 and 1994                  13
           Consolidated Statements of Cash Flows for the Years
             Ended December 31, 1996, 1995 and 1994                        14
           Notes to Consolidated Financial Statements                   15-27

        2. Financial Statement Schedule:

           Schedule II - Valuation and Qualifying Accounts and Reserves    32

        All other schedules are omitted because they are not applicable,  or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.

(b)     Reports on Form 8-K:

        No reports on Form 8-K were filed for the  quarter  ended  December  31,
1996.

(c)     21.Additional Exhibits.

           a)  Listing of all subsidiaries of the Registrant:
               Phoenix  Westcom  Cablevision,  Inc.,  a Nevada  corporation  and
               wholly owned subsidiary.



<PAGE>


                                                                   Page 31 of 32


                                   SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                 PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                                      A CALIFORNIA LIMITED PARTNERSHIP
                                                (Registrant)

                                 BY: PHOENIX LEASING INCORPORATED,
                                      A CALIFORNIA CORPORATION
                                      GENERAL PARTNER

        Date:  March 25, 1997    By: /S/  GUS CONSTANTIN
               --------------        ------------------------
                                     Gus Constantin, President

        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

        Signature                       Title                         Date
        ---------                       -----                         ----


/S/ GUS CONSTANTIN      President, Chief Executive Officer and a  March 25, 1997
----------------------  Director of Phoenix Leasing Incorporated, --------------
(Gus Constantin)        General Partner


/S/ PARITOSH K. CHOKSI  Chief Financial Officer,                  March 25, 1997
----------------------  Senior Vice President,                    --------------
(Paritosh K. Choksi)    Treasurer and a Director of
                        Phoenix Leasing Incorporated
                        General Partner


/S/ BRYANT J. TONG      Senior Vice President,                    March 25, 1997
----------------------  Financial Operations of                   --------------
(Bryant J. Tong)        (Principal Accounting Officer)
                        Phoenix Leasing Incorporated
                        General Partner


/S/ GARY W. MARTINEZ    Senior Vice President and a Director      March 25, 1997
----------------------  of Phoenix Leasing Incorporated           --------------
(Gary W. Martinez)      General Partner


/S/ MICHAEL K. ULYATT   Partnership Controller                    March 25, 1997
----------------------  of Phoenix Leasing Incorporated           --------------
(Michael K. Ulyatt)     General Partner


<PAGE>
<TABLE>

                                                                                                   Page 32 of 32


                                    PHOENIX LEASING CASH DISTRIBUTION FUND IV,
                                  A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY

                                                    SCHEDULE II
                                              (Amounts in Thousands)



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<CAPTION>
         COLUMN A                  COLUMN B             COLUMN C          COLUMN D        COLUMN E      COLUMN F
      Classification              Balance at           Charged to        Charged to      Deductions    Balance at
                                  Beginning of           Expense           Revenue                       End of
                                     Period                                                              Period
---------------------------  --------------------- ------------------- --------------- -------------- -------------

<S>                                 <C>                <C>                <C>             <C>           <C>        
Year ended December 31, 1994
  Allowance for losses on accounts
    receivable                      $     296          $    263           $    0          $   72        $   487
  Allowance for early termination
    of financing leases                 1,509               718                0             408          1,819
  Allowance for losses on notes
    receivable                          1,551               908                0             195          2,264
                                    ---------          --------           ------          ------        -------

    Totals                          $   3,356          $  1,889           $    0          $  675        $ 4,570
                                    =========          ========           ======          ======        =======


Year ended December 31, 1995
  Allowance for losses on accounts
    receivable                      $     487          $    386           $    0          $  325        $   548
  Allowance for early termination
    of financing leases                 1,819               408                0           1,472            755
  Allowance for losses on notes
    receivable                          2,264               110                0             133          2,241
                                    ---------          --------           ------          ------        -------

    Totals                          $   4,570          $    904           $    0          $1,930        $ 3,544
                                    =========          ========           ======          ======        =======


Year ended December 31, 1996
  Allowance for losses on accounts
    receivable                      $     548          $      0           $    3          $  121        $   424
  Allowance for early termination
    of financing leases                   755               352                0             166            941
  Allowance for losses on notes
    receivable                          2,241                 0               17               0          2,224
                                    ---------          --------           ------          ------        -------

    Totals                          $   3,544          $    352           $   20          $  287        $ 3,589
                                    =========          ========           ======          ======        =======

</TABLE>